Boeing Commercial Airplanes Chief Leaving Amid 737 MAX Crisis--Update

Date : 10/22/2019 @ 10:48PM
Source : Dow Jones News
Stock : Boeing Co (BA)
Quote : 367.0  0.0 (0.00%) @ 11:29AM
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Boeing Commercial Airplanes Chief Leaving Amid 737 MAX Crisis--Update

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By Andrew Tangel and Doug Cameron 

Boeing Co. shuffled the ranks of top management on Tuesday, replacing the head of its jetliner business as it struggles to shore up confidence among customers, investors and lawmakers in the company's handling of the 737 MAX crisis.

The removal of Kevin McAllister as chief executive of the Boeing Commercial Airplanes division is the first high-level departure from the plane maker since the second crash of a MAX, in March, triggered a global grounding of its best-selling jet and billions of dollars in losses at the nation's largest exporter.

Stan Deal, head of Boeing's fast-growing services unit, will succeed Mr. McAllister, who moved to the aerospace company from General Electric Co. about three years ago.

The executive reshuffle comes on the eve of Boeing's quarterly earnings. Investors expect the company to take additional charges as the grounding of the MAX moves into its eighth month following the two deadly crashes, with a return to service not expected until early next year.

Mr. McAllister, who joined Boeing in November 2016, has been credited by analysts with improving its production system. But he has faced criticism from some airlines over his communication surrounding the grounding of the MAX and efforts to return it to service. At GE, he headed its aviation services unit, the support arm of the conglomerate's aircraft-engine business.

His departure follows a two-day board meeting in San Antonio that took place as the company's crisis deepened, and 10 days after Chief Executive Dennis Muilenburg was stripped of his chairman role. David Calhoun, a senior executive at the Blackstone Group Inc., is now chairman.

Much of Boeing's design and certification of the MAX preceded Mr. McAllister's tenure. But he oversaw the internal response to the first 737 MAX crash in Indonesia, on Oct. 29, 2018, including his division's still-unfinished work to fix a MAX flight-control system also implicated in the second accident. At the same time, he took a less public role than Mr. Muilenburg in dealing with the crisis.

Mr. McAllister's tenure has been marked by problems that extend beyond the MAX at the world's largest aerospace company by sales. Various Boeing airplane programs have suffered setbacks, including the delayed introduction of the latest wide-body 777X. The plane maker struggled to rev up its supply chain to meet demand for its best-selling single-aisle jet, the 737. The U.S. Air Force has sharply criticized Boeing for manufacturing lapses as evidenced by tools and other debris left inside refueling tankers, a major safety issue for the military.

In an interview in June, Air Force procurement chief Will Roper called out a Boeing commercial facility in the Seattle area as particularly beset by problems.

"We've seen issues across Boeing but the Everett facility, I would say, is the most advanced of those," Mr. Roper said. "But we've seen issues across Boeing and that just tells me that there's a lapse of culture."

A Boeing spokesman has said the plane maker ramped up efforts to improve its manufacturing. "Although we've made improvements to date, we can do better," the spokesman said.

Mr. McAllister at times defended his tenure internally by arguing he was dealing with a mess he had inherited, people familiar with the matter said. He also came under scrutiny internally for not visiting Boeing customers in Indonesia and Ethiopia after the crashes of the airlines' 737 MAX aircraft, these people said.

The MAX crisis has put considerable strain on Boeing. Executives have been mulling whether to further cut or halt production at its Renton, Wash., 737 factory, as finished planes pile up.

Last week, scrutiny of Boeing executives and board members intensified following disclosures of a former Boeing pilot's instant messages that suggested he unknowingly misled regulators in his work on the MAX. Federal authorities have been conducting a criminal investigation into whether Boeing misled customers or regulators about the MAX.

Before Mr. Muilenburg lost his dual role as chairman, the board approved an overhaul of how Boeing handles engineering and safety, effectively centralizing his control over matters under the purview of the commercial-airplane unit in the Seattle area.

Mr. Muilenburg, who is based in Chicago. will remain in the spotlight in the MAX crisis next week when he testifies before Congress. He is slated to testify with John Hamilton, the chief engineer in what was Mr. McAllister's division. Mr. McAllister hadn't been scheduled to appear.

Mr. Deal, a 33-year company veteran, previously ran Boeing Global Services, which Mr. Muilenburg aims to build into a $50 billion-a-year business. Mr. Deal will be succeeded by Ted Colbert, Boeing's current chief information officer.

Attempts to reach Mr. McAllister weren't immediately successful. In a statement, he said: "Boeing is a great company with a commitment to safety I have seen firsthand working side-by-side with many thousands of tremendously talented and dedicated employees."

Mr. Deal was picked to run Boeing's new services arm two years ago when the company consolidated its units providing parts and training for commercial and military aircraft in an effort to boost market share.

The services market is larger and more profitable than the jetliner business, and Boeing's push under Mr. Deal has upset some suppliers.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Doug Cameron at doug.cameron@wsj.com

 

(END) Dow Jones Newswires

October 22, 2019 18:33 ET (22:33 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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